ABOUT BRUS CHAMBERS

Internship

WHAT WE DO

 |

WHO WE ARE

 |

INFORMATION & INSIGHTS

 |

CAREER

 |

CONTACT US

 PRACTISING LAW SINCE 1992     

 
Pritish Das

 
Pritish Das (Mr)
Legal Researcher
 
   
   
EMAIL : pritish@bruschambers.com
TELEPHONE : +91-22-22659969
   
OFFICE : Mumbai, INDIA
   
EXPERTISE + Enforcement of Foreign Arbitral Award
+ Contract Litigation & Arbitration
+ Infrastructure Litigation
+ Bunker & Crew Claims - Ship Arrest
 
 

He specialises in execution or enforcement of foreign arbitral award or decree in India; contract litigation and arbitration. Litigation before the High Court, Supreme Court of India and Civil Courts in India. He analyse the contractual dispute and identifies the strong and weak point within the dispute, he also specialises in recovery of unpaid crew wages and bunker dues by arresting a ship anywhere in India,.drafting of commercial legal notices and replies

Every year Brus Chambers successfully litigate, settle, or try numerous domestic and international contract disputes. Pritish Das specialises in the fields of infrastructure disputes within projects, unpaid crew wages and bunker dues within shipping. The contracts at the center of these infrastructure disputes have involved highway, dams, bridges, property, roads, tunnels, pipelines, mining, marine, power and energy. .   

His contract dispute includes international arbitration practice, is aggressive and result oriented. Brus Chambers is an award winning law firm and is considered to be one of the best law firm for enforcement of foreign arbitral award or decree in India, ship arrest in India, contract litigation and is ranked by several independent credential bodies.   

Pritish Das approach to resolving issues faced by clients is practical, direct, speedy and effective .   

 
'Pritish Das, advising on entire gamut without a flaw for enforcement of foreign arbitral award'
                    - BOMAG
 
'Pritish Das is quick in recovery of bunker dues
                    - ExxonMobil

'Pritish Das, assisting to the right path and a definitive guide to execution of foreign arbitral award'
                    - Class

Pritish Das is a practical person with analytical mind for infrastructure and construction litigation'
                    - Projects Monitor

'Pritish Das has solid understanding on arbitration, enforcement  of foreign arbitral award and judgment decree'
                    - Honeywell
 
'Pritish Das, has good understanding of contract and business law, advises on the weak and strong points'
                    - Tiana Wansell & Co, Italy
 
'Pritish Das is a good strategist and is good in showing the road map’
                    - Fletch & Fletch, Dubai

Pritish Das understands complicated contracts and finds a solution, he is a practical person with analytical mind'
                    - Andy, Neil & Thompson

'Pritish Das procedure and legal understanding on execution  of foreign arbitral award is fantastic'
                    - Herbert Mettl
 

FAQ'S ON ENFORCEMENT OF ARBITRAL AWARDS AND DECREES IN INDIA.

What is the position of a foreign award, after the court is satisfied that the award is enforceable ?
Where the court is satisfied that the foreign award is enforceable under chapter 1 of part II, the award shall be deemed to be a decree of that court. (Section 49)

What are the grounds on which the enforcement of a foreign award may be refused ?
Enforcement of a foreign award may be refused at the request of the party against whom it is invoked, only if that party furnishes to the court proof that :

(a) the parties to the agreement referred to in Section 44 were, under the law applicable to them, under some incapacity, or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made; or

(b) the party against whom the award is invoked was not given proper notice of the appointment of the arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or

(c) the award deals with a difference not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration:

However it has been provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be enforced; or

(d) the composition of the arbitral authority or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, was not in accordance with the law of the country where arbitration took place; or

(e) the award has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which, that award was made.

Enforcement of an arbitral award may also be refused if the court finds that :

(a) the subject-matter of the difference is not capable of settlement by arbitration under the law of India; or

(b) the enforcement of the award would be contrary to the public policy of India.

Explanation : Without prejudice to the generality of clause (b) of this section, it is hereby declared, for the avoidance of any doubt, that an award is in conflict with the public policy of India if the making of the award was induced or affected by fraud or corruption.

If an application for the setting aside or suspension of the award has been made to a competent authority referred to in clause (e) of sub-section (1) the court may, if it considers it proper, adjourn the decision on the enforcement of the award and may also, on the application of the party claiming enforcement of the award, order the other party to give suitable security. (Section 48)

What evidence has to be produced at the time of applying for the enforcement of a foreign award ?
The party applying for the enforcement of a foreign award shall, at the time of the application, produce before the court:

(a) the original award or a copy thereof, duly authenticated in the manner required the law of the country in which it was made;

(b) the original agreement for arbitration or a duly certified copy thereof; and

(c) such evidence as may be necessary to prove that the award is a foreign award.

If the award or agreement to be produced under sub-section (1) is in a foreign language, the party seeking to enforce the award shall produce a translation into English certified as correct by a diplomatic or consular agent of the country to which that party belongs or certified as correct in such other manner as may be sufficient according to the law in force in India. (Section 47)

Is a foreign award within the meaning of New York Convention, binding ?
Any foreign award which would be enforceable under Chapter 1 of Part II shall be treated as binding for all purposes on the persons as between whom it was made, and may accordingly be relied on by any of those persons by way of defence, set off or otherwise in any legal proceedings in India and any references in Chapter 1 Part II of the said Act of 1996, to enforcing a foreign award shall be construed as including references to relying on an award. (Section 46)

What is a foreign award under the New York Convention Awards ?
Part II of The Arbitration and Conciliation Act, 1996, Chapter 1 deals with New York Convention Awards. Unless the context otherwise requires, "foreign award" means an award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law enforced in India, made on or after 11th October, 1960 :
(a) in pursuance of an agreement in writing for arbitration to which the Convention set forth in the First Schedule applies, and
(b) in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made may, by notification in the Official Gazette, declare to the territories to which the said Convention applies. (Section 44).

The term "First Schedule" refers to the New York Convention on the recognition and enforcement of foreign arbitral awards.

Does the limitation Act apply to an Arbitration?
Yes, the limitation Act 1963 applies to Arbitration as it applies to proceedings to court. For the purposes of limitation Act 1963 the Arbitration shall be dimmed to have commenced on the date on which a request for that dispute to be referred to Arbitration is made and received by the respondent.

Where an Arbitration agreement to submit future dispute to Arbitration provides that any claim to which agreement applies shall be bar unless some step to commence Arbitration is taken within a time fixed by the agreement and a dispute arises to which the agreement applies, the court, if it is of opinion that in the circumstances of the case undue hardship would otherwise be caused, and not withstanding that the times of fixed has expired, may on such terms if any as the justice of the case may require, extend the time for such period as it thinks proper.

Where the court orders that the arbitral award be set aside, the period between the commencement of the Arbitration and the date of the order of the court shall be excluded in computing the time prescribed by the Limitation Act, for the commencement of the proceedings (including Arbitration) with respect to the dispute so submitted.

Which Court will have Jurisdiction in a case where an application has already been made with respect to an Arbitration agreement?
Notwithstanding anything contained elsewhere in this Part or in any other law for the time being in force, where with respect to an Arbitration agreement any application under this Part has been made in the court, that court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that court and in no other court. (Section 42)

What is the position in case of insolvency of a party ?
Where the contract so provides and where the receiver in insolvency adopts the contract, the Arbitration agreement shall be enforceable by or against him so far as it relates to any such disputes.

Where a person who has been adjudged an insolvent had, before the commencement of the insolvency proceedings, became a party to an Arbitration agreement, and any matter to which the agreement applies, is required to be determined in connection with, or for the purposes of, the insolvency proceedings, than, any other party or the receiver may apply to the judicial authority having Jurisdiction in the insolvency proceedings, for an order directing that the mattering question shall be submitted to Arbitration and the judicial authority may make an order accordingly. (Section 41) .

Does an Arbitration agreement stand discharge by death of party there to ?
No, and in case of death of the party the same is enforceable by or against the legal representative of the deceased. Similarly the mandate of an Arbitrator shall not be terminated by the death of any party by whom he was appointed.

Nothing is this Section shall affect the operation of any Law by Virtue of which any right of action is extinguished by death of a person. (Section 40).

PROCEDURE
The procedure for enforcement and execution of decrees in India is governed by the Code of Civil Procedure, 1908 ("CPC") while that of arbitral awards in India is primarily governed by the Arbitration & Conciliation Act, 1996 ("Act") as well as the CPC.

Domestic and foreign awards are enforced in the same manner as a decree of the Indian court. This applies also for consent awards obtained pursuant to a settlement between parties. However, there is a distinction in the process for enforcement of an award based on the seat of arbitration. While the enforcement and execution of an India - seated arbitral award ("domestic award") would be governed by the provisions of Part I of the Act, enforcement of foreign - seated awards ("foreign award") would be governed by the provisions of Part II of the Act.1

A few steps that are crucial for ensuring successful enforcement of arbitral awards and execution of decrees are:
 Making effective service on opposite party/ judgment debtor is crucial to prevent objections at later stage;
 Taking necessary steps by way of attachment/ notice/ arrest/ appointment of receiver or in another manner;
 Remember that principles of natural justice apply to even execution proceedings.

Enforcement of domestic awards
An award holder would have to wait for a period of 90 days after the receipt of the award prior to applying for enforcement and execution. During the intervening period, the award may be challenged in accordance with Section 34 of the Act. After expiry of the aforesaid period, if a court finds the award to be enforceable, at the stage of execution, there can be no further challenge as to the validity of the arbitral award.

Prior to the recent Arbitration and Conciliation (Amendment) Act, 2015 ("Amendment Act"), an application for setting aside an award would tantamount to a stay on proceedings for execution of the award. However, by virtue of the Amendment Act, a party challenging an award would have to move a separate application in order to seek a stay on the execution of an award.3

Process for Challenge & enforcement
Application for enforcement of the award should be made in the Commercial Court or Commercial Division of the High Court, where subject- matter of dispute lies or where respondent resides or carries on business. Application for Setting aside of the award should be made in the foreign curial court.

Grounds of Challenge - Foreign Award

 Original award or a duly authenticated copy in the manner required by the country where it is made.
 Original agreement or duly certified copy.
 Evidence necessary to prove the award is a foreign award, wherever applicable.

Enforcement of Foreign awards
India is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, 1958 ("New York Convention") as well as the Geneva Convention on the Execution of Foreign Arbitral Awards, 1927 ("Geneva Convention"). If a party receives a binding award from a country which is a signatory to the New York Convention or the Geneva Convention and the award is made in a territory which has been notified as a convention country by India, the award would then be enforceable in India. Out of the 196 countries in the world only 48 countries have been notified by the Central Government as reciprocating countries, the notified countries are Australia; Austria; Belgium; Botswana; Bulgaria; Central African Republic; Chile; China (including Hong Kong and Macau) Cuba; Czechoslovak Socialist Republic; Denmark; Ecuador; Federal Republic of Germany; Finland; France; German Democratic Republic; Ghana; Greece; Hungary; Italy; Japan; Kuwait; Mauritius, Malagasy Republic; Malaysia; Mexico; Morocco; Nigeria; Norway; Philippines; Poland; Republic of Korea; Romania; Russia; San Marino; Singapore; Spain; Sweden; Switzerland; Syrian Arab Republic; Thailand; The Arab Republic of Egypt; The Netherlands; Trinidad and Tobago; Tunisia; United Kingdom; United Republic of Tanzania and United States of America. India has entered into an agreement with the United Arab Emirates for Juridical and Judicial co-operation.

The enforcement of a foreign award in India is a two-stage process which is initiated by filing an execution petition. Initially, a court would determine whether the award adhered to the requirements of the Act. Once an award is found to be enforceable it may be enforced like a decree of that court. However at this stage parties would have to be mindful of the various challenges that may arise such as frivolous objections taken by the opposite party, and requirements such as filing original/ authenticated copy of the award and the underlying agreement before the court.

Conditions for enforcement of arbitral awards : domestic and foreign
A party may resort to the following grounds for challenging an award. Such an award would be rendered unenforceable when:
 The parties to the agreement were under some incapacity.
 The agreement in question is not in accordance with the law to which the parties have subjected it, or under the law of the country where the award was made (especially in case of foreign awards).
 There is a failure to give proper notice of appointment of arbitrator or arbitral proceedings.
 Award is ultra vires the agreement or submission to arbitration.
 Award contains decisions on matters beyond the scope of submission to arbitration.
 Composition of the arbitral authority or the arbitral procedure is ultra vires agreement.
 Award is not in accordance with the law of the country where the arbitration took place.
 The award (specifically a foreign award) has not yet become binding on the parties, or has been set aside or suspended by a competent authority of the country in which, or under the law of which that award was made.
 Subject matter of the dispute is not capable of settlement by arbitration under Indian law.
 Enforcement of the award would be contrary to the public policy of India.


Stamping and registration requirements of awards : domestic and foreign

A. Domestic Awards

 The Stamps Act 1899 provides for stamping of arbitral awards with specific stamp duties and Sec- tion 35 provides that an award which is unstamped or is insufficiently stamped is inadmissible for any purpose, which may be validated on payment of the deficiency and penalty (provided it was original). Issues relating to the stamping and registration of an award or documentation thereof, may be raised at the stage of enforcement under the Act. (M. Anasuya Devi and Anr v. M. Manik Reddy and Ors (2003) 8 SCC 565). The Supreme Court had also observed that the requirement of stamping an award and registration is within the ambit of Section 47 of the CPC and not covered by Section 34 of the Act.
 The quantum of stamp duty to be paid would vary from state to state depending on where the award is made. Currently, as per the Maharashtra Stamp Act, the stamp duty for arbitral awards stands at five hundred rupees in Maharashtra; and in case of Delhi, as per Schedule 1A to the Stamp (Delhi Amendment) Act 2001, the stamp duty is calculated at roughly 0.1% of the value of the property to which the award relates.
 Under Section 17 of the Registration Act, 1908 an award has to be compulsorily registered if it affects immoveable property, failing which, it shall be rendered invalid.

B. Foreign Awards

 As far as foreign awards are concerned, the Delhi High Court in Naval Gent Maritime Ltd v Shivnath Rai Harnarain (I) Ltd. 174 (2009) DLT 391, observed that a foreign award would not require registra- tion and can be enforced as a decree, and the issue of stamp duty cannot stand in the way of deciding whether the award is enforceable or not. A similar approach was adopted by the Bombay High Court in the cases of Vitol S.A v. Bhatia International Limited 2014 SCC OnLine Bom 1058. A similar princi- ple has been set out by the High Court of Madhya Pradesh in Narayan Trading Co. v. Abcom Trading Pvt. Ltd., 2012 SCC OnLine MP 8645.

IV. Stamping and registration requirements of awards : domestic and foreign

A. Domestic Awards

 The Stamps Act 1899 provides for stamping of arbitral awards with specific stamp duties and Sec- tion 35 provides that an award which is unstamped or is insufficiently stamped is inadmissible for any purpose, which may be validated on payment of the deficiency and penalty (provided it was original). Issues relating to the stamping and registration of an award or documentation thereof, may be raised at the stage of enforcement under the Act. (M. Anasuya Devi and Anr v. M. Manik Reddy and Ors (2003) 8 SCC 565). The Supreme Court had also observed that the requirement of stamping an award and registration is within the ambit of Section 47 of the CPC and not covered by Section 34 of the Act.
 The quantum of stamp duty to be paid would vary from state to state depending on where the award is made. Currently, as per the Maharashtra Stamp Act, the stamp duty for arbitral awards stands at five hundred rupees in Maharashtra; and in case of Delhi, as per Schedule 1A to the Stamp (Delhi Amendment) Act 2001, the stamp duty is calculated at roughly 0.1% of the value of the property to which the award relates.
 Under Section 17 of the Registration Act, 1908 an award has to be compulsorily registered if it affects immoveable property, failing which, it shall be rendered invalid.

B. Foreign Awards

 As far as foreign awards are concerned, the Delhi High Court in Naval Gent Maritime Ltd v Shivnath Rai Harnarain (I) Ltd. 174 (2009) DLT 391, observed that a foreign award would not require registra- tion and can be enforced as a decree, and the issue of stamp duty cannot stand in the way of deciding whether the award is enforceable or not. A similar approach was adopted by the Bombay High Court in the cases of Vitol S.A v. Bhatia International Limited 2014 SCC OnLine Bom 1058. A similar princi- ple has been set out by the High Court of Madhya Pradesh in Narayan Trading Co. v. Abcom Trading Pvt. Ltd., 2012 SCC OnLine MP 8645.

How courts examine awards
 The grounds of challenge enlisted are exhaustive and courts cannot expand the grounds for refusal of enforcement.
 Executing court cannot re-examine the award apart from satisfying itself on a superficial basis about the award.
 Executing court cannot examine the merits of the case.
 The exercise is not an "appeal" on merits against order of tribunal, but merely review.
 Accordingly, the court has to first make enquiry as to enforceability of award and secondly hold that it is enforceable and thereafter enforce it.
 Executing court cannot re-examine the award apart from satisfying itself on a superficial basis about the award.
 Executing court cannot examine the merits of the case.
 The exercise is not an "appeal" on merits against order of tribunal, but merely review.
 Accordingly, the court has to first make enquiry as to enforceability of award and secondly hold that it is enforceable and thereafter enforce it.

Enforcement of arbitral awards: Appropriate forum & limitation
Award arising out of an India seated arbitration (being an International Commercial Arbitration):
By virtue of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act 2015 ("Commercial Courts Act") and the Amendment Act, the Commercial Division of a High Court where assets of the opposite party lie shall have jurisdiction for applications relating to enforcement of such awards if the subject matter is money. In case of any other subject matter, Com- mercial Division of a High Court which would have jurisdiction as if the subject matter of the award was a subject matter of a suit shall have jurisdiction, i.e., where the opposite party resides or carries on business or personally works for gain.

Award arising out of an India seated arbitration (not being an International Commercial Arbitration):
As per the Commercial Courts Act and the Amendment Act, for such cases, the appropriate court would be the Commercial Court exercising such jurisdiction which would ordinarily lie before any principal Civil Court of original jurisdiction in a district, as well as the Commercial Division of a High Court in exercise of its ordinary original civil jurisdiction.

Foreign Awards:
Where the subject matter is money, the Commercial Division of any High Court in India where assets of the opposite party lie shall have jurisdiction. In case of any other subject matter, Commercial Divi- sion of a High Court which would have jurisdiction as if the subject matter of the award was a subject matter of a suit shall have jurisdiction.

Limitation period for enforcement of awards

Domestic awards
Since arbitral awards as deemed as decrees for the purposes of enforcement (as observed by the Supreme Court in M/s Umesh Goel v. Himachal Pradesh Cooperative Group Housing Society (2016) 11 SCC 313), and the Limitation Act 1963 applies to arbitrations, the limitation period for enforcement of such an award is twelve years.

Foreign awards
Various High Courts have given varying interpretations on the limitation period within which a party may enforce an award. The Bombay High Court5 has observed that since a foreign award is not a decree per se and would not be binding on parties unless a competent court records it as enforceable, it would undergo a two-step process. Thus, the application for enforcement of a foreign award would fall within the residuary provision of the Schedule to the Limitation Act, that is, the limitation period would be three years. Thereafter, on recognizing the award as a decree, the limitation period for execution of such a decree would be twelve years therefrom. However, the Madras High Court held a contrary view by referring to foreign awards as deemed decrees, and the corresponding limitation period would be twelve years. It held that, "the foreign award is already stamped as a decree and the party having a foreign award can straight away apply for enforcement of it and in such circumstances, the party having a foreign award has got 12 years time like that of a decree holder."

The Act provides that certain conditions (as listed above) have to be assessed prior to enforcement of a foreign award, and where the court is satisfied that the foreign award is enforceable, the award shall be deemed to be a decree of that court.7 However, the Supreme Court in M/s. Fuerst Day Lawson Ltd v. Jindal Exports Ltd. 2001 (6) SCC 356, held that under the Act a foreign award is already stamped as the decree. It observed that, "In one proceeding there may be different stages. In the first stage the Court may have to decide about the enforceability of the award having regard to the requirement of the said provisions.

Once the court decides that foreign award is enforceable, it can proceed to take further effective steps for execu- tion of the same. There arises no question of making foreign award as a rule of court/decree again." 

Enforcement of domestic decrees in India: Appropriate forum & limitation

A. Appropriate forum:

On a decree being passed, execution proceedings can be initiated for enforcement of the decree. Section 36 to 74 and Order XXI of the CPC set out the provisions in respect of execution.

The person in whose favour a decree has been passed or an order capable of execution has been made is known as a "decree-holder" while the person against whom a decree has been passed or an order capa- ble of execution has been made is known as a "judgment-debtor".

The proceedings to execute a decree must be initiated, in the first instance, before the court which passed it. Where appropriate, such court may transfer the decree to another court for execution for var- ious reasons including the locus of the judgment debtor or the locus of the property against which the decree is sought to be executed.9

B. Limitation Period

As per the Limitation Act 1963, the period of limitation for the execution of a decree (other than a decree granting a mandatory injunction, in which case, it is three years) is twelve years from the date of the decree. However, an application for execution of a decree granting a perpetual injunction shall not be subject to any period of limitation.

Enforcement of foreign judgements in India

Domestic and Foreign 

Section 2(6) of the CPC defines "foreign judgment" as "the judgment of a foreign Court," which refers to a Court situated outside India and not established or continued by the authority of the Central Government.

At the time of enforcement of foreign judgments in India, two situations may arise depending on whether the foreign judgment is passed by a court in: (i). A reciprocating country10 ; (ii). A non-re- ciprocating country. A party seeking enforcement of a decree of a court in a reciprocating country is required to file execution proceedings in India while in case of a decree from a non-reciprocating
country, a fresh suit has to be filed before the relevant court in India. The time limit for filing a suit for enforcement for such foreign judgments is three years from such judgment being delivered.

Procedure for enforcement of foreign judgments
The first major step towards enforcement of foreign judgments in India is, to file execution proceed- ings, which is done by following the procedure, as envisaged under Section 44A and Order XXI of the CPC (illustrated above).

Regarding the "court" before which an execution petition is to be filed:
 The Bombay High Court has an established view that Section 44A clearly gives jurisdiction to the Bombay High Court which, for the purposes of execution of the decree, would be considered as the District Court.
 However, the Delhi High Court has an unsettled view. On reference to Section 5(2) of the Delhi High Courts Act 1966, notwithstanding anything contained in any law for the time being in force, the High Court of Delhi shall also have in respect of the said territories ordinary original civil juris- diction in every suit the value of which exceeds rupees two crores. Thus, a Single Judge of the Delhi High Court had observed that for avoiding "unnecessary confusion "There is no legal impediment" to approach the High Court in the first instance for execution of the decree of a value of more than Rs. 20 lakhs, as in the instant case."12 However, it was set aside by the Division Bench of the Delhi High Court which observed that "the legislature has vested such "District Court" the power to execute the "foreign decree" as if it had been passed by itself" and not the Delhi High Court. This judgment was further appealed before the Supreme Court of India, which has granted a stay on the judgment of the Divi- sion Bench.14 This is now pending before the Supreme Court for final disposal.

a. Requirements for enforcement of foreign judgment

Under Section 44A of the CPC, where a certified copy of decree of any of the superior courts of any reciprocating territory has been filed in a district court, the decree may be executed in India as if it had been passed by the district court. For proceeding with the execution, the certified copy of the decree shall be filed along with a certificate from such superior court stating the extent, if any, to which the decree has been satisfied or adjusted. Such certificate shall be deemed as the conclusive proof of the extent of such satisfaction or adjustment.

b. Grounds of challenge to enforcement of foreign judgments

Section 13 of the CPC provides that a foreign judgment may operate as res judicata by being conclusive with respect to any matter adjudicated upon thereby (which does not include the reasons laid down in the foreign judgment). However, this shall not be applicable where:
a. It has not been pronounced by a Court of competent jurisdiction. While ascertaining competence of a foreign court, it has to be established that the concerned court is vested with jurisdiction in terms of its pecuniary and territorial limits, as well as rules of private international law.
b. It has not been given on the merits of the case;
c. It appears on the face of the proceedings to be founded on an incorrect view of international law or a refusal to recognise the law of India in cases in which such law is applicable;
d. The proceedings in which the judgment was obtained are opposed to natural justice;
e. It has been obtained by fraud;
f. It sustains a claim founded on a breach of any law in force in India

c. Judicial Approach

Courts have been consistent of the view that a party would not be bound by the jurisdiction of a for- eign court if it has not submitted to such jurisdiction of the foreign court [Raj Rajendra Sardar Maloji -v- Sri Shankar Saran AIR 1962 SC 1737; R.M.V. Vellachi Achi v. R.M.A. Ramanathan Chettiar AIR 1973 Mad. 141]. Whether a party has voluntarily submitted to the jurisdiction of the foreign court, would depend on the facts and circumstances of the concerned case, for example, if a defendant appears in the Court where the suit is instituted and questions both the jurisdiction and challenges the action on merits, he is said to have submitted to the jurisdiction voluntarily.15 Generally, as noted by the Madras High Court, the following denote instances of submission to the jurisdiction of the foreign court:

 Where the person is a subject of the foreign country in which the judgment has been obtained against him on prior occasions.
 Where he is a resident in foreign country when the action is commenced.
 Where a person selects the foreign Court as the forum for taking action in the capacity of a plaintiff, in which forum he is sued later
 Where the party on summons voluntarily appears
 Where by an agreement a person has contracted to submit himself to the forum in which the judg- ment is obtained.

As had been held in International Woollen Mills v. Standard Wool (U.K.) Ltd. (2001) 5 SCC 265, a judg- ment shall be considered to be given on merits if some evidence (oral and/or documentary) is adduced on behalf of the plaintiffs. The Odisha High Court in Trilochan Choudhury v. Dayanidhi Patra AIR 1961 Ori 136, observed that a judgment, however, brief, would be enforceable if it is based on a consideration of evidence. Similarly, the Bombay High Court, in Marine Geotechnics LLC, v. Coastal Marine Construc- tion & Engineering Ltd (2014) 3 AIR Bom R 193 held that ex parte decrees would also be valid. Judgments which follow summary procedure or otherwise shall not be considered as judgments given on merits of the case if there has been no examination of the evidence. Further, judgments based on consent or terms of settlement are also considered valid as being given on merits of the case, as observed by the Bombay High Court in HSBC Bank USA v. Silverline Technologies Ltd AIR 2006 Bom 134. However, cases where the decree results from the sheer absence of the defendant either by way of penalty or in a for- mal manner, the judgment may not be one based on the merits of the case.

Similarly, the Supreme Court in R. Vishwanathan v. Rukn .Ul. Mulk Syed Abdul Wajid AIR 1963 SC 1, observed that enforcement of a foreign judgment would be vitiated on non-observance of the judicial process, i.e. if the court rendering the judgment fails to observe the minimum requirements of natural justice. Thus, it is required that parties are given reasonable notice and adequate opportunity of pre- senting their respective cases. Additionally, a foreign judgment would be rendered unenforceable if the foreign court was imposed upon or tricked into giving the judgment.

Enforcement of foreign judgments from non-reciprocating countries
In case of a foreign judgment from a non-reciprocating country, it can be enforced only by filing a suit upon the judgment. Under such cases where a suit is filed before a court in India for enforcing a foreign judgment, the six exceptions under Section 13 shall not be of relevance to the court considering such foreign judgment for enforcement. The court shall not examine if such foreign judgment is in fact correct in fact or law since a new obligation arises on such a suit being filed. The party is left with the option to sue on the basis of the foreign judgment or on the original cause of action in the domestic court. Where a suit on a foreign judgment is dismissed on merits, no further application shall lie for the execution of such foreign judgment as it had merged in the decree which dismissed such suit for execution. In an event a decree is passed in favour of the party filing such a suit for enforcing the for- eign judgment, it may proceed to execute it.

Modes of Execution
Since foreign awards, domestic awards and foreign judgments (from reciprocating countries) are to be executed in India as a decree passed by an Indian court, the modes of execution for foreign awards and judgments and domestic awards and judgments are also common.

On an application made by the decree-holder for execution of the decree/ award (whether foreign or domestic), the court may order the execution of the decree / award by one or more of the following modes:
 by delivery of any property specifically decreed
 by attachment and sale or by sale without attachment of any property
 by arrest and detention in prison
 by appointing a receiver
 by any other manner as the nature of the relief granted may require.

In case of decrees involving payment of money, execution by detention in prison shall be ordered only after the judgment debtor is given an opportunity of showing cause as to why he should not be impris- oned. In doing so, the court has to record in writing and be satisfied that the judgment debtor would obstruct or delay the execution of the decree. An executing court cannot go behind the decree, that is, it does not have the power to modify the terms of the decree and must take it as it stands. In case there are multiple decree-holders, the assets, after deducting the costs of realization, shall be distributed among all such persons.

The Indian Arbitration law clearly distinguishes between the procedure that is to be followed regarding enforcement of domestic and foreign arbitral awards. A bare reading of the Arbitration and Conciliation Act, 1996 would imply that Part I of the Act deals with domestic awards, while Part II of the Act is exclusive for foreign awards. Further, Chapter I of Part II states that only those foreign awards would be enforceable in India if it has been passed in a country to which New York Convention (Convention on Recognition and Enforcement of Foreign Arbitral Awards 1958) applies (For the purpose of this article, a country to which New York Convention applies shall be referred as Convention Country) and is further notified by the Indian government. Because of this, a contentious issue is evolved: What if an award has been made in a country which is not signatory to the New York Convention? Regarding the enforcement of such award, the Indian Supreme Court appeared to be confused itself as it can be seen in its judgments. The question remains unanswered even after the Constitution Bench decision in BALCO v. Kaiser Aluminium Technical Services Inc.

Position of India on the New York Convention.

The Indian Government signed the New York Convention with the following conditions:
In accordance with Article I of the Convention, the Government of India declare that they will apply the Convention to the recognition and enforcement of awards made only in the territory of a State, party to this Convention. They further declare that they will apply the Convention only to differences arising out of legal relationships, whether contractual or not, which are considered as commercial under the law of India. 

These conditions have been incorporated in the Part II of the Act, which deals with the enforcement of foreign arbitral awards. Under Section 44 of the Act, foreign award means an arbitral award on differences between persons arising out of legal relationships, whether contractual or not, considered as commercial under the law in force in India and is made in one of such territories as the Central Government, being satisfied that reciprocal provisions have been made may, by notification in the Official Gazette, declare to be territories to which the said Convention applies.

Though the term commercial has nowhere been defined in the Act, a broad interpretation of this term has been preferred by the Supreme Court of India. In R.M. Investment & Trading Co. Pvt. Ltd. v Boeing Co., the Court took reference from the UNCITRAL Model Law on International Commercial Arbitration (1985) which considers commercial representation or agency and consulting to be relationships of a commercial nature.

Further, it should be noted that:
"the reciprocity requirement as it is expressed in the Act is more onerous and considerably more restrictive than what is contemplated by the New York Convention. Section 44 not only requires that the award is made in a Convention Country, but the country also has to be notified in Indias Official Gazette as being a country to which the New York Convention applies." 

That is to say the Arbitration Act lays down the process for the enforcement of all those awards that are rendered in countries to which New York Convention applies and are notified by the Indian government. However, the Act and Part II is silent on the enforcement of awards that are rendered in countries that are not notified under the gazette or those countries that are not party to New York Convention. More importantly, of the 142 countries which have signed the New York Convention to date, only about 47 countries have been notified in the Official Gazette of India as countries in which the New York Convention applies. Around 95 Convention Countries which have not been officially gazette include regular seat jurisdictions for international arbitrations such as Canada, the United Arab Emirates or New Zealand. Therefore, questions regarding recognition and enforcement of arbitral awards made in those countries are of substantial importance.

Enforcement of Non-Convention Country Award & the Legal Position in India

The issue regarding enforcement of award from non-convention country was elaborately discussed by Supreme Court in 3-judges bench judgment in Bhatia International Ltd v Bulk Trading SA. It was held that an award passed in an international commercial arbitration in a non-convention country, though not enforceable under Part II, would be treated as a domestic award and would be enforceable under the provisions of Part I of the Act.

It was of the view that S. 2(2) of the Act does not expressly provide that Part I of Act would not apply to arbitrations held outside India, as it does not use the word "only" in relation to the applicability of Part I to arbitrations held in India. The main reasoning of the Court was that if Part I of the Act only applied to arbitrations held in India, it would amount to holding that the Legislature has left a lacunae in the said Act. As per the Supreme Court, [t]here would be a lacunae as neither Part I or II would apply to arbitrations held in a country which is not a signatory to the New York Convention or the Geneva Convention (hereinafter called a non-convention country). It would mean that there is no law, in India, governing such arbitrations.

Therefore, as per the judgment, for all domestic or foreign awards passed in non-convention countries, provisions of Part I would apply and hence enforcement mechanisms as envisaged under Part I would be equally applicable to awards passed in non-convention countries.

The Bhatia judgment faced a lot of criticism. The main criticism was that it rejected the territoriality principle to distinguish Parts I and II of the Act. Soon after in Shreejee Traco (I) (P) Ltd. v Paperline International Inc., Justice RC Lahoti (as he then was) took a contrary view and held that S. 2(2) of the Act was clear and unambiguous that Part I would not apply where the place of arbitration is outside India. However, the judgment in Bhatia International prevailed as it was delivered by a larger bench of the Supreme Court.

Agreeing with what was laid down in Bhatia International, the Court in Venture Global Engineering v. Satyam Computer Services Ltd reiterated that the provisions of Part I of the Act would apply to all arbitrations including international commercial arbitrations and to all proceedings relating thereto. It also held that in the case of international commercial arbitrations held out of India provisions of Part-I would apply unless the parties by agreement, express or implied, exclude all or any of its provisions. It was also of the view that such an interpretation does not lead to any conflict between any of the provisions of the Act and there is no lacuna as such. It further said:

By omitting to provide that Part I will not apply to international commercial arbitrations which take place outside India the effect would be that Part I would also apply to international commercial arbitrations held out of India. But by not specifically providing that the provisions of Part I apply to international commercial arbitrations held out of India, the intention of the legislature appears to be to allow parties to provide by agreement that Part I or any provision therein will not apply. Thus in respect of arbitrations which take place outside India even the non-derogable provisions of Part I can be excluded. Such an agreement may be express or implied. 

The Court, while relying heavily on Bhatia judgment, held that a foreign award can be challenged under S. 34 of the Act, since Part I of the Act would apply to such foreign awards unless it was expressly or impliedly excluded by the parties.

However, the applicability of various provisions of the Act to arbitrations held outside India was finally laid down to rest in the decision by a constitution bench of the Supreme Court. In Bharat Aluminium Co. v Kaiser Aluminium Technical Services Inc., the main issue arising was the applicability of Part I of the Act to arbitrations that take place outside India following the decisions of the court in Bhatia and Venture. The Constitution Bench overruled Bhatia and Venture and upheld the territoriality principle as fundamental to the Act. In the Courts view, Part I of the Act would only apply to domestic and international commercial arbitrations that took place in India and would not apply to arbitrations that took place outside India. It held that a plain reading of Section 2(2) makes it clear that Part I is limited in its application to arbitrations which take place in India. It said that the omission of the word "only" from Section 2(2) indicates that applicability of Part I of the Arbitration Act, 1996 is not limited to the arbitrations that take place in India, and that if Part I were to be applicable to arbitrations seated in foreign countries, certain words would have to be added to Section 2(2) which would be contrary to the contextual intent and object of Section 2(2) of the Act. It also said that there is no overlapping of the provisions in Part I and Part II; nor are the provisions in Part II supplementary to Part I. Rather there is complete segregation between the two parts. It further was of the view: {I]f the gap or lacuna is disclosed, it would be for the Parliament to rectify the same. Such a task cannot be undertaken by the Court.

To quote from the judgment,

"We are of the opinion that merely because the Arbitration Act, 1996 does not cover the non convention awards would not create a lacuna in the Arbitration Act, 1996. If there was no lacuna during the period in which the same law was contained in three different instruments, i.e. the Arbitration Act, 1940 read with 1961 Act, and the Arbitration (Protocol and Convention) Act, 1937, it cannot be construed as a lacuna when the same law is consolidated into one legislation, i.e. the Arbitration Act, 1996. 

It added:

It must further be emphasised that the definition of foreign awards in Sections 44 and 53 of the Arbitration Act, 1996 intentionally limits it to awards made in pursuance of an agreement to which the New York Convention, 1958 or the Geneva Protocol, 1923 applies. It is obvious, therefore, that no remedy was provided for the enforcement of the non convention awards under the 1961 Act. Therefore, the non convention award cannot be incorporated into the Arbitration Act, 1996 by process of interpretation. The task of removing any perceived lacuna or curing any defect in the Arbitration Act, 1996 is with the Parliament [T]he clear intention of the legislature is not to include the Non-convention Awards within the Arbitration Act, 1996.

The position has now been made clear by the Constitution Bench that a foreign award passed in a non-convention country cannot be enforced under the Arbitration Act. However, the following question is still left unanswered: In the absence of legislative intervention, how can foreign awards rendered in a non-convention country be enforced in India?

At this moment, it is of considerable importance to refer to the judgment of the Supreme Court in the case of Badat & Co. Bombay v. East India Trading Co. which was passed much prior to enactment of the present Arbitration Act, 1996. The Supreme Court had laid down that the awards passed in a non-convention country can be enforced on grounds of justice, equity and good conscience. To quote,

[U]nder the Arbitration Protocol and Convention Act, 1937 (VI of 1937), certain commercial awards made in foreign countries are enforceable in India as if they were made on reference to arbitration in India. The provisions of this Act, however, apply only to countries which are parties to the Protocol set forth in the First Schedule to the Act or to awards between persons of whom one is subject to the jurisdiction of some one of such powers as the Central Government being satisfied that the reciprocal provision have been made, may, by notification declare to be parties to the Convention, setforth in the Second Schedule to the Act. It is common ground that these provisions are not applicable to the awards in question. Apart from the provisions of the aforesaid statute, foreign awards and foreign judgments based upon awards are enforceable in India on the same grounds and in the same circumstances in which they are enforceable in England under the common law on grounds of justice, equity and good conscience.


 

 

 

 
 

Brus Chambers is a partnership law firm registered under the Indian Partnership Act and is also registered with the Bombay High Court as Advocates & Solicitors and with the Bombay Incorporated Law Society as Solicitors. All partners are also registered with the Bar Council to practice law while some partners are also registered with the Supreme Court of India as Advocate on Record and Solicitor of the Supreme Court of England and Wales. The information provided in the entire site is of general nature and may not apply to any particular set of facts or circumstances. It should not be construed as soliciting for client nor as legal advice and does not constitute an engagement of Brus Chambers or establish an attorney-client relationship. If you wish to browse our URL any further then may we request you to read the terms & disclaimer page.

bruschambers.com

bruschambers.com

CHOOSE LANGUAGE